Archive for October, 2007
“MORE THAN $36 BILLION IN annual advertising on broadcast and cable TV networks rides on estimated audience measurements from third parties,” writes Diane Mermigas, editor-at-large at MediaPost, in MediaDailyNews. Her point is that all this money is being paid to TV channels based on the assumption that vewers have seen commercials and programs. And that assumption, in turn, is still being made based on the old-style TV ratings, whose accuracy leaves much to be desired.
At the time when media and marketing are being converted to digital technologies, advertisers are “wrestling with how much marketing dollars to split between TV — where they think they still reach the so-called masses — and more precisely measured online and other digital media — where there is some individual accountability,” says Diane Mermigas.
She quotes NBC Universal’s CEO Jeff Zucker, who was asked about the viability of the current TV ratings system: “Zucker replied: “They are what we live by and what we all have to judge ourselves by; whether they are accurate or not, whether there are issues or not. We all have to play by the same rules, and we cannot get caught up in saying that’s not the rules we should play by.”"
According to Diane Mermigas, that kind of attitude on the part of TV media owners and traditional media measurement companies “will keep the ratings sham as a lynchpin of television economics, even as more meaningful metrics and measurement options develop across all media spaces.”
Many advertisers, however, do not share Mr. Zucker’s position towards old-style ratings as the basis for ROI measurements. The explosion of Internet advertising (especially of the pay-per-click model), driven by unequivocal accountability, the fast growth of Outdoor (driven by digital conversion and newer metrics), and the slowdown of TV advertising growth are proofs to that effect.
Mermigas says: “The present challenge is measuring and reconciling the statistical reach of consumers for all TV programs wherever and whenever they are viewed, be it TV, mobile or DVR. The aggregate measurement for programs has to be credible.
But in a new era of personalized, consumer-centric media, why would any company be allowed to think that sampled metering is an acceptable substitute, even as television and other incumbent industries convert to digital measurement and distribution?
It may have something to do with the inextricable broadcast networks and television stations’ legacy systems of reporting, using and pricing against those inexact metrics,” writes Mermigas.
So, that explains why, as media buyers are using lack of measurements as a valid excuse for not buying digital signage space, the only way to convince them at this point is to give them the TV-style CPMs, CPPs and GRPs they are used to. Digital signage networks who can offer that, can succeed in getting national advertisers, sometimes. But, as we all know, the above metrics have very little to do with the real advertising ROI, and that is one of the reasons why ad budgets are still largely off limits to digital signage networks.
Here’s another couple of quotes from this brilliant piece:
“… The bad news is going to get worse as viewers consume more of the broadcast network content in time-shifted, Internet-streaming, direct downloaded ways outside the traditionally measured Nielsen universe, where a single rating now represents 1.3 million TV homes.“
“… If the networks are serious about generating at least one dollar of new media revenue to replace every dollar of conventional advertising lost, they had best throw their money and energy behind measurement systems that certify reach on all platforms. And they can’t do that with their head in the sand,†concludes Diane Mermigas.
While there are still no viable enough metrics for online display advertising, paid-search marketing is booming, thanks to the fact that advertisers only pay for click-throughs, and impression counts are delivered free of charge (so no CPMs, only cost-per-click!). If you are using e-commerce, you can get quite accurate sales conversion (or goal conversion) numbers, which is the closest you can get to ideal ROI measurements in advertising today.
I am just wondering, what will it take (and how long) for the digital signage industry to develop the metrics that reflect the real campaign effectiveness. In fact, this is the multi-billion question.
October 12th, 2007
A surge in digital media and marketing deals has driven ‘merger and acquisition activity in media to a record this year,’ according to Jordan Edmiston Group, a New York investment bank, as The Wall Street Journal reported today.
MediaDailyNews wrote on Tuesday that “…defiant forces are spurring media and related Internet deals into 2008, defined by some new rules and expectations.
Free market dynamics keep the deal engine chugging despite nagging concerns about the credit crunch, weak U.S. dollar, mounting high-cost debt, tumultuous emerging markets, and retrenching private equity and other lenders. That’s because the baseline objectives remain constant. Money gets behind the best ideas, best management and best practices in global and digital arenas bursting with opportunities. The smartest and most able companies win, delivering a huge windfall to investors.”
The Wall Street Journal  interviewed Mr. Anton Levy of the investment firm General Atlantic which has acquired a number of digital media companies lately. Mr. Levy says the M&A boom in digital marketing will remain hot: “You have got this massive shift that you are seeing where all consumable media is trending towards digital environments and the huge ad dollars that are going to follow that audience. That large secular trend is creating a lot of different things. It’s creating new business models, current companies are trying to adjust their existing business models and a massive amount of people and talent are being attracted to the space.â€
Mr. Levy says the rising wave of acquisitions in digital media is not likely to be slowed down by the credit market slump: “Folks like Google, Yahoo, Microsoft and [Time Warner’s] AOL, I think you will see those groups likely to be less affected by some of the macromarket environment issues like the credit market…I think they will largely be unaffected. Folks like ourselves — in the growth-equity part of the private-equity market — will also be less affected by the credit-market environment. So within digital media, which is really a high-growth category, I think you will see less of an impact.â€
And, speaking about the ‘hottest’ M&A properties in the digital media space, Mr. Levy named ‘digital exchange marketplace’, ‘advertising networks’ and ‘better targeted advertising’: “I’d say there are a couple of areas that are interesting at this point. You are seeing a number of assets in the digital-exchange marketplace…You are seeing an explosion of advertising networks; you have seen a lot of M&A activity in that area and you will see the area continue to be attractive for investors… Another area is better targeted advertising. Anybody who is able to come to the table and help marketers better target customers is attractive.â€Â
Although the WSJ article never uses the term ‘digital signage’, it is quite obvious that the interview referred to what we know as ‘digital signage networks’ when mentioning ‘the explosion of advertising networks’ and - partially - in ‘better targeted advertising’.
October 10th, 2007
Fabio Aversa asked about the RSS feeder. Fabio, you can find the RSS feeds links at the top of the right-hand side column of the Home page, under the heading: Subscribe to this blog. You could also find these links on every page. And thank you for your kind words.
“Very interesting and very well written content! My compliments.
You are just missing the “RSS feeder†so that the readers can easily follow-up with new articles. Or maybe you have it and I couldn’t find it?
Cheers,
Fabio”
October 10th, 2007
Darin Gilstrap posted this great question:
“BroadSign Bloggers: Since there are several media math formulas currently being used to calculate digital signage media buys, I truly wonder which formulas are really apples-to-apples. Can you charge a national advertiser a flat ad-spot rate/per month/per location across 500, 1000, 2000+ locations? As a network grows do advertisers hesitate to pay more based on network growth? What about niche audiences for example women-only, Hispanics, African American networks, do they garner higher rates based on tighter targeting.”
Darin, thank you for the sharp question. I will forward it to some of our client networks and let’s see what they answer. Also, it would make it easier if you can clarify which exactly formulas you mean in this case when you say: “there are several media math formulas currently being used to calculate digital signage media buys?”
October 10th, 2007
I have updated my old ‘digital signage versus other media’ comparison doc. Apparently, quite a few people told me they found it useful in the process of selling the concept of digital signage advertising to new media buyers and advertisers.
Here is the updated version: Why Digital Signage?
Please feel free to send me your comments/edits/suggestions.Â
Cheers,
it’s a long weekend here in Canada!
October 5th, 2007
Newspapers’ share of the global advertising market will decline to 26.2% by 2009 from 29.0% in 2006. These numbers were revealed by a new study conducted by the international ad agency ZenithOptimedia and reported by Editor and Publisher journal on Thursday.
ZenithOptimedia predicts that Outdoor advertising, ‘helped by digital technology’, ‘will increase its market share worldwide to 5.6% from 5.9%’ (I think there is a typo in the article here, it probably should have been: “to 5.9% from 5.6%.” NU).
The study concluded that “Newspapers are suffering the most from the depredations of the internet, which is better at delivering timely news and is an efficient substitute for newspaper classifieds.”
In the US, “the nation’s total spend on advertising will grow just 2.5% — down from the modest 3.3% growth ZenithOptimedia forecast earlier this year. “The continued slump in the US housing market has led to a sharp drop in property and construction advertising, particularly property classifieds in newspapers,” the study said (as reported by Editor & Publisher).
“Internet advertising will grow a stunning 85% in the next two years, ZenithOptimedia predicts, but it will still account for less than 10% of global ad share by 2009. The agency expects Internet advertising to account for 9.5% of all expenditure in 2009, up from 6.1% in 2006,” reports Editor and Publisher.
Taking advantage of future events like Summer Olympics in Beijing and developing media markets in Asia, “television will increase its share of global ad expenditure from 37.9% in 2007 to 38.2% in 2008, an all-time record,” while continuing to lose ad share in North America ( a drop by 0.3% to 32.4%) and Western Europe (a drop of 0.5% in share to 30. 4%), the study says.
October 5th, 2007
This may change the way the subway systems look around the world, once the technology is sorted out. CBS Outdoor is starting a trial of a technnology that will replace traditional posters opposite the platforms in the London Underground with projected moving advertising messages. The new ‘cross trax’ projection (XTP) system will be installed at Euston station on the Victoria line from this week (Friday October 5) for a five-week observation period, according to this story on mad.co.uk.
“Once the test period has proven successful, 150 units will be rolled out across the selected tube stations from the start of 2008.
The XTP system will only project images and not sound at this stage, but is expected to reduce 4.1 tonnes of waste.”, says the article.
Sounds like a good week for the outdoor industry. Digital billboards were ruled ‘permissible’ in the US on Monday, and now – the digital posters in the underground.
The CBS Outdoor web site calls it:
• World’s biggest outdoor contract
• Investment to change the face of London’s Tube network
• New innovation to establish digital outdoor as a mainstream media
The web site says further: “The London Underground contract, the largest of its kind in the world will run for 8.5 years and includes management and maintenance of all advertising locations across London’s Tube network – consisting of 33,000 poster sites at 275 London Underground stations, as well as 88,000 panels inside Tube trains. The Victoria Coach Station contract includes advertising rights at what is the busiest station in the UK.”
According to AVInteractive, the technology for the contract is supplied by Digital Projection International (DPI).
October 4th, 2007
Putting an end to the confusion as to ‘how to classify digital boards and whether or not they should be allowed’, the Federal Highway Administration recently ruled that digital billboards are permissible and are not “flashing†or “intermittent,†according to this article by MediaWeek. Clearly, it’s a big win for outdoor media companies such as Clear Channel and Lamar Advertising, who started exploring this field several years ago and both now operate an outdoor digital signage network.
Media Week says that as a result of the ruling, the Outdoor Advertising Association of America is expecting several hundred more digital billboards to be installed next year. There are about 700 digital displays in operation out of a total of 450,000 static billboards in the US, as estimated by the OAAA.
Andy Manis for The New York Times. A digital billboard on the Beltline Highway in Madison, Wis. (reprinted from the New York Times online edition)
As reported by digitalsignagetoday.com, the new ruling contains guidelines that suggest display times between four and ten seconds with eight seconds as the recommended static dwell time. In regard to lighting, the memo said signs should be “not unreasonably bright for the safety of the motoring public.†‘The recent, clearly worded FHWA guidance memo updates and clarifies a 1996 FHWA memo that said changeable message billboards are acceptable if allowed by states and the signs do not contain flashing, intermittent, or moving lights,’ writes digitalsignagetoday.com.
MINNETONKA, Minn. (AP) — When officials in this Minneapolis suburb didn’t like the two eye-popping digital billboards that Clear Channel erected along the freeway, they literally pulled the plug.They had the power company cut off the electricity. Posted by Mac on Starts & Stops blog
October 1st, 2007
The world’s biggest media research firm, Nielsen Co., announced pilot results of the In-Store Prism initiative – or ‘essentially a ratings system for in-store media and marketing that measures reach and frequency similar to TV,’ reports Advertising Age late on Sunday night. The Pioneering Research for an In-Store Metric (PRISM) is a consortium that comprises, among others, the biggest retailer (Wal-Mart), the biggest advertiser (P&G) and the biggest media-buying agency in the world (Starcom MediaVest Group).
“Shopper marketing is a new medium as important as the internet, mobile or gaming,” declared Starcom MediaVest Group North America CEO Renetta McCann at the announcement of pilot results, “It’s a brand-new ballgame, and we’re all in.”
The Rise of Shopper Marketing
Source: Deloitte/GMA draft study
According to Peter Hoyt, executive director of the In-Store Marketing Institute, until recently ‘media agencies weren’t in the game at all,’ but now they are following the media companies: ‘the parents of the four leading broadcast networks have a stake in some facet of in-store media’ says Ad Age. Five media agencies have already joined the consortium behind the Prism effort, said George Wishart, global managing director of Nielsen In-Store.
Nielsen CEO David Calhoun compare Nielsen In-Store’s emerging metric to his company’s TV and Internet rating. “It will allow in-store to rightfully take a seat at the marketing table and be considered in an analytical manner consistent with all good marketing and media planning,” he is quoted in the Ad Age article. “What you can measure, you can manage.”
That’s certainly a major achievement for Nielsen. They were the first to recognize the need to have a stake in the powerful medium of the future (in-store marketing) and led the process of initiating measurements.
Yet, I have some naive questions, and may be someone could enlighten me:
1. TV ratings are better than nothing but they are very far from being a reliable metric (experts and TV advertisers themselves say). Over 100 years after it was said, many advertisers are still repeating that only 50% of their advertising works but they have no idea which half it is. Ratings refer mostly to programs, not the commercials (which are increasingly zapped or ignored). Besides, TV sets are usually far from the products advertised on them. By contrast, when it comes to in-store, all ads are near the products, so why not just track sales uplift or ad-triggered actions, the way Internet does it? If I am not mistaken, the main metrics for online advertising are number of click-throughs, click-through rates, cost-per-click, cost-per-sale (for e-commerce), and not the ratings. Online impressions are measured free of charge. I can see how Internet ratings can be useful for wooing first-time advertisers, but ratings are not enough to retain them. The web has gone much further than that in proving its effectiveness, and that is the reason why it’s growing so fast. So my naive question is: are ratings the best the sophisticated measurement industry can do for in-store marketing?
2. Audience studies give you an indispensable insight, but they are also quite expensive. I wonder how much a Prism study would cost and how many advertisers or retailers (or digital signage networks) would be able to afford it?
Brandweek’s Mike Beirne gives an example of a sceptical view: “While proponents contend that an in-store metric could give POP players a seat at the marketing table, not all are convinced. “I see a lot of upside . . . but I still think decisions are going to be price-driven compared with other forms of marketing,” said Alan Foshay, director of business development at Rapid Displays, Brunswick, Maine. “No one questions spending $3 million for a 30-second spot but tell a client they should spend $3 million on in-store, that seems like a lot of money.”"
I would add: the decisions are going to be price-driven at first, and ROI-driven after the first campaigns show (or do not show) results at the cash register.
October 1st, 2007
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